Maryland Renters Face Trend Toward Continuing Rent Hikes

“WHY YOUR RENT CHECK JUST KEEPS GOING UP” was the headline in CNN Money’s real estate special report in July 2015, which could have explained to Maryland renters (especially in Baltimore) why it is that their rents keep rising faster than home values. After all, that doesn’t seem to make sense!

Why Are Rent Prices Rising?

The list of reasons is long, and taken all together, fairly convincing:

• Millennials are renting longer.

• Housing inventory is tight and getting tighter.

• The housing crash scared those who would otherwise have become homeowners.

• Baby Boomers are downsizing.

It all comes down to demand and supply—less of the latter, more of the former. Although the author may have exaggerated a detail or two (“…there just aren’t enough ‘For Rent’ signs to keep up with the demand”), more than one Baltimore renter will probably agree with the gist of the piece: rents have been on the rise long enough that it makes you want to think about the alternative: buying.

Some of the more extreme cases are urban: in San Francisco and Denver, for instance, renters have seen yearly increases of 15% and 11.6%, respectively, according to Zillow. Maryland renters can find themselves in something of a bind, though—since those higher rent bills make saving for a down payment more difficult. It’s just one reason. Per CNN, “There are a bunch of things keeping renters on the sidelines, meaning “the folks that would be normally making the switch to become homeowners are still taking up the rental units.”

Will this Catch-22 situation persist forever? Most likely not: the broad economic news is that this year’s steady job growth coupled with the pronounced turnaround in builder confidence is likely to loosen the supply stranglehold. Last Tuesday, there was also the kind of news that can prompt builders to really get going: government data showed purchases of new U.S. homes surged (particularly in the Northeast and West), with sales of new homes soaring 24% so far in 2015. That’s the best showing since 2007.

Of course, before supply outstrips demand, the situation puts landlords in an advantageous position. Maryland Real Estate investors who bought rentable properties during the downturn can now enjoy steady returns from their properties, or decide to sell in a robust market.

No matter if you are looking to rent, or taking the step to home ownership, ExecuHome Realty is here to help.Call us at 443-632-3800.We are Maryland Largest In-State Real Estate Company.